Thursday, September 29, 2011

In its "Notable and Quotable" today's WSJ compares the George H.W. Bush and Ronald Reagan responses to an April 28, 1980, debate question about immigration. The editors are seemingly pointing to this part of Reagan's answer:

"Rather than talking about putting up a fence, why don't we work out some recognition of our mutual problems? Make it possible for them to come here legally with a work permit -- and then while they're working and earning here, they pay taxes here. And when they want to go back, they can go back. And open the border both ways by understanding their problems."

What do we know? Reagan won. Sad to say, he did not make much progress on this part of his stance.

Bleeding Heart Libertarians takes up the simple idea that free and open markets and institutions can be quite "compassionate". I put the word in quotes because its free and easy use has become a rhetorical device and a conversation stopper.

Steven Landsburg recently took up this problem in his review of the Q and A between Wolf Blitzer and Ron Paul, re a hypothetical about turning an uninsured heart attack victim away at an emergency clinic. Landsburg points out that the reflexive compassionate choice is the easy one. In a world of scarcity, much deeper questions are involved.

Libertarians and free market types have something to contribute here. But very few political candidates even try to make this case. Reagan apparently tried and still managed to get elected. If more tried, these ideas might even make some progress.

Tuesday, September 27, 2011

We know that there is brisk demand for economic indicators. Warren Buffett likes rail freight carriers.

The cited Texas Transportation Institute report (co-sponsored by the American Road & Transport Assoc.) notes the rebound in the Washington DC area. One can never be sure that this is a good thing for the rest of us. What do these guys produce? Granted that some rule-making and rules-enforcement is too the good, I worry about the sons and daughter of Solyndra scurrying around the capital and accounting for the extra traffic delays that USA Today conjectures is an upbeat sign.

No public program has ever been "overfunded", but most of them are always "underfunded." Can it be that they misuse the resources they have? Clifford Winston makes the case that for transportation this is exactly the problem.

Sunday, September 25, 2011

I have lived in LA most of my life and have driven to be near the Hollywood (formerly Hollywoodland, to advertise a local real estate development) sign twice, each time when out-of-town visitors asked to go there. It was never simple (it is not an officially designated monument) and there are fences (depending on the approach). But GPS has changed the ballgame. Today's NY Times tells that story ("Stalking the Biggest Star in Hollywood: Its Sign").

Conflicting property rights always makes a good story (if you are not personally involved). This is where people form opinions and alliances. It is also where lawmakers and even judges eventually step in. And even then, there are typically no happy endings.

The Times story mentions one historian who compares the sign to the Eiffel Tower. My recollection of Y2K events on TV brings this up. Coverage followed the advance of the new millenium across the planet. We got to see some of the celebrations in Sydney, Paris, London, New York -- all of which are easily photogenic. As the Earth rotated, Y2K came to LA and I started to wonder which will be the photogenic LA icon?

By this time, the Y2K novelty was receding. The TV cameras revealed then-Mayor Richard Reardon and some of the local pols standing around the Hollywood sign. Poor Reardon read the obligatory awkward statement. Then the cameras went to a line-dancing event at a high school gym in nearby Burbank.

Places like LA and Burbank compete on their own terms. The Grand Manner city planning tradition (Kostof) has come and gone. If we forget this, we get embarrasing TV coverage as on Y2K. We also get another tourists-vs-residents conflict as now seen in the Hollywood hills.

Thursday, September 22, 2011

Here is my wise USC colleague Lisa Schweitzer describing her unhappiness with the latest public transit news. And here is my wise friend Wendell Cox describing continued suburbanization in the U.S. Both trends were supposed to have turned around in (pick your date, author or source).

A propos, below is "A Parable" about Wise Elders (this time capitalized), as told by the wise Paul Heyne:

Once upon a time the Wise Leaders of an unnamed country came to the conclusion the experience of watching movies in the theater was essential to the flourishing of the human spirit, and that consequently people should never be denied the opportunity to attend a movie simply because they could not afford it. So the government took over ownership of all the movie theaters and began admitting people free of charge.

Then a quite unexpected thing happened. Going to the movies became a horrible experience. First of all, you had to stand in line every time you wanted to go. Then when you got in you couldn’t find two seats together—unless you had queued up an hour early. And when the movie started you couldn’t hear. People were talking, running around, engaging in all sorts of horseplay. Every movie was full of kids, most of whom seemed to have more interest in socializing than in watching the film. And many of the kids were very little. Troops of small children regularly filed into movie theaters led by someone who looked like a baby sitter. And they usually wound up creating a terrible din. But it wasn’t only the kids. Adults, too, seemed to spend more time going out for pop and popcorn than sitting in their seats. And when they did finally settle down, it was worse than when they were running in and out, because so many of them chattered incessantly. It was as if most of the people who now came to movies weren’t particularly interested in movies, and consequently made movies a horrible experience for those who really did care about them and wanted to see and heart and enjoy the experience that had once been rightly deemed essential to the flourishing of the human spirit. The spirit was no longer flourishing. People regularly got into fights at the movies, and some people, it is believed, started coming to the movies just to watch the fights and cheer them on.

And so the Wise Elders gathered in council to deal with the crisis of congestion in the movies theaters. They debated two alternatives. One proposal called for building more movie theaters to accommodate all the people who now wanted to go to the movies. The other proposal called for subsidies to improve the quality of television programming, in the hope that this would draw enough people out of the theaters to ease congestion. Given the fact that movies were essential to the flourishing of the human spirit, and that people should consequently not be denied admission because of mere inability to pay, there seemed to be no other options. And so the Wise Elders debated long and fiercely: Should they build more theaters? Should they improve the quality of television? Or should they do some of both?”

Wednesday, September 21, 2011

Politicians on the campaign trail fish around for "the right" image and this is a much bigger deal in the age of TV than ever. I broached this in a blog last Thurs (Sep 15) because I was always stumped by how and why the Richard Nixon image worked with voters.

Today's WSJ includes "Candidates Figure What Voters Need From Them Is a Good Dressing Down ... Hopefuls Embrace 'Campaign Casual' And Roll Up Their Sleeves Only So Far." It's a fun read and an update on how the image-thing is going these days. Will Mitt Romney wear the Gap skinny jeans his wife bought when he's next on the campaign trail?

Would James Madison be surprised? I do not know. I imagine Kenneth Arrow is not surprised. He did win a Nobel for proving an Impossibility Theorem. If different voters have different priorities, it is difficult to cobble together a platform that satisfies a majority -- very roughly speaking.

The candidates understand well the difficulties of cobbling together a winning coalition. We often cite any "charisma". Charismatic people get way with murder (so to speak) because we relax our due diligence when they walk into the room. One can more easily cobble together a winning coalition if one can get away with telling different groups what they want to hear, even when there are inconsistencies between the story one tells group A and the version one tells group B.

Get the image right. (Figure out just how far to roll up sleeves, if a guy.) Take a shot at charisma. Blur your stances on issues. Appeal to group A as well as group B. Win election.

Sunday, September 18, 2011

I have now experienced two "best and brightest" Presidential administrations. JFK's administration prompted David Halberstam to give us that apt phrase, but assassination and myth-making blurred the lesson for most people. Some people fall in love with the idea that the "best and the brightest" are in office and "run the country." Falling in love has some well known risks.

The second "best and brightest" episode is the one that began sometime in 2008. The second episode also included many voters falling in love with the candidate.

There is not much left to say about Solyndra. Industrial policy has the twin Achilles' heels (either one would be bad enough) of inevitable politicization and ignoring the knowledge problem. Knowledge is much too dispersed for top-down wisdom to replace market vetting. But "green jobs" and "stimulus" were just too much temptation. Paul Gregory summarizes all of this very clearly.

There is every reason to believe that the Bushies would have gone forward with the Solyndra deal (or others like it) but they would never have been as slick or effective in their staging and presentation as the news conference now being played by all the TV news shows of Obama's 2010 unveiling speech at the Solyndra facility.

So what is there left to say? We can be surprised that people are surpised by the whole episode. And we can be disappointed that the lesson that many choose to take from the episode is that it was just a matter of moving too fast and "inadequate vetting." I have not yet heard "the law of unintended consequences" being invoked, but that one is always within reach.

Thursday, September 15, 2011

Governance and politics are vastly complicated and therefore fascinating. We know that images are all-important, but are nevertheless fascinated when the masks come off. Today's LA Times includes "Jackie Kennedy, warts and all ... Interviews from 1964 give us a less than flattering but fuller portrayal of the iconic first lady."

I have never understood how the Richard Nixon image (package) worked for as long as it did. Some of the mystery is clarified by David Halberstam in his masterful The Fifties. I have only limited recall of those days, but Halberstam reminds readers of the weight of fears of Communism in American life and politics, the influence of Joe McCarthy, the Republican effort to regain power, their interest in Eisenhower, their preception that a Nixon could do some things that an Eisenhower could not, etc. Interestingly, Eisenhower could never really understand Nixon and there is lots of evidence that he disdained his VP. Ike tried to dump him from the ticket in 1952 an again in 1956 -- each time stinging the old Nixon paranoia re his outsider status.

Halberstam devotes half of the Nixon chapter to wife Pat (Ryan) Nixon, her past and her role in the image-making behind the Nixon successes. Richard Nixon was every bit as weird as his odd look. (Sam Rayburn is quoted on his assessment that Nixon's was the most hateful face he had ever seen in the House of Reps.) But Halberstam evokes the emergence of the Nixons and the Ryans from poverty and (outsider status) -- and the eventual successful Dick-and-Pat image. The Nixons evidently pioneered the use of the adoring wife prop in their politicking. Her posture in the TV and other campaign appearances (including the "Checkers" speech) was their innovation.

It is all much more complex than I can describe here. The good news is that we manage to survive these characters. May it last.

It's all good stuff. Conventional government means politics and homeowners' associations means more politics. MacCallum held up the hotel as an alternative. It includes all manner of public services and public facilities. Occupants consume them as part of a contract that they sign when they check in. It's the "public" vs the "private" alternative, here meaning the headaches of politics vs the headaches of principal-agent problems. The latter is a threat to any large organization. How do the owners make sure that the interests of the many people working for them are aligned with theirs? It is not simple.

In fact, the choice of headaches is not simple either. The way to go is to allow choice and switching. Cities could become hotels or "cities as hotels" could become cities. Bob Nelson has long been arguing for ways to given neighorhoods the option to secede and privatize.

Sunday, September 11, 2011

We often use fudge words or phrases to close out or finish an argument. These are usually standard rhetorical devices. Perhaps the most abused involves "fair" or "fairness". When pressed, very few can spell out what they have in mind.

"Fair" gets twice as many Google hits as "sex". Perhaps that's not a fair comparison.

In today's NY Times, Greg Mankiw writes about the problems that policy makers have in getting business people to invest. Conventional "stimulus" may do more harm than good. He ends this way:

Economists often rely on the convenient shortcut of separating long-run and short-run issues. Recessions are then viewed as short-run problems that require short-run solutions. That approach, however, may be simplistic. Lack of investment spending is a large part of the economy’s current difficulties, but capital investments are always made with an eye toward the future.

The best fix for our short-run problems may be to focus on policies that will foster long-run growth as well.

Let's do X in the short-run, but Y in the long-run, is another famous fudge. We owe the reader some sense of what we mean. That's never simple, but don't broach the topic if you do not know. Spend now, but attend to deficits later? Please provide readers with an inkling of what you have in mind. If you have no idea, then say so.

Friday, September 09, 2011

Most people have pretty good recall of when and where they were at the moment of auspicious events, such as 9/11. Other indelible recollections are with respect to personal moments. This sounds way beyond nerdy, but one of those moments for me was sitting in an econ class at U Penn in the late 1960s and (finally) figuring out that, whereas there was pretty good theory and evidence for household consumption expenditures, our understanding of business investment expenditures was not anywhere close to that. In fact, the latter are more volatile and subject to hard-to-quantify business-people's mood swings. "Animal spirits" is too glib.

But the cliche is that as most of demand comes from consumers, we have to get them to spend. Robert Higgs shows here that consumers are spending, but it is business owners that are not. Will Obama's latest make a difference in that department? There has not been a rousing reception at today's NYSE where the Dow shed over 300. I know that there is plenty of economic worry all over the world, but bidders also jump all over good news when they sense it.

Wednesday, September 07, 2011

My favorite features at Marginal Revolution are their "markets in everything" posts. They have even created a seperate URL for their collected posts on the topic. I see that various other bloggers have picked up on the idea.

Here is one I have not seen before: this morning's LA Times includes this story about a local university that will pay employers to hire their grads.

This week's game-of-the-week is to anticipate what President Obama will say when he gives his "jobs" speech. And we are into election season and all of the candidates are getting on board with their stories on how they will "create jobs".

I stick to the idea that market participants "create jobs" but politicians can get in the way; they cannot "create jobs" although they eagerly talk as though they could because of the widespread belief (hope) that they have such powers.

Offering to "get out of the way" does not resonate any more. Voter are eager to believe that politicians can "create jobs" and politicians are eager to pander to the idea. Democracy is a mixed blessing.

I am still waiting for the candidate who pledges that he or she will not run for a second term if specific targets are not met by a certain date. Targets could include a specific jobless rate (or employment rate), and inflation rate (any measure specified in advance), a spending level, unfunded liability level (Medicare) and/or any others. I would love to see one of them offer to tie themselves to the mast. They might then discover the merits of a lower policy profile.

Sunday, September 04, 2011

In his latest weekly WSJ"Mind and Matter" column, Matt Ridley concludes this way: "Sometimes, both in biology and in technology, two good ideas live so far apart that they rarely get a chance to mate." This is a riff on the widely quoted line from his The Rational Optimist, "I believe that at some point in human history, ideas began to meet and mate, to have sex with each other."

Ridley evokes the heart of modern urban economics. Cities thrive and are important because this is where ideas are spawned and refined. In today's NY Times, Ryan Avent takes it a step further in "One Path to Better Jobs: More Density in Cities." He criticizes Bay Area (and similar) NIMBY policies that limit densities, push up land prices and, thereby, put a crimp in the whole business.

But that is not the whole stort. Some of the writers in Randall Holcombe and Benjamin Powell's Housing in America also show that a blind insistence on greater density can be costly.

So what do we know? (1) The big metropolitan areas include millions of land parcels and "the correct" density for each cannot be known by planners and policy makers; this is why we have land markets; (2) land markets are supposed to bring forth a pattern of densities that make the whole thing work; you may be the "land use planner" of your very own shopping mall, in which case you would not dream of making a blanket statement that it should be developed at "high" or "low" densities; you would have a complex design in mind, whereby the various parcels are occupied in ways that make the whole project a success; (3) much of the discussion of "density" is incomplete, often simply asserting that density ought to be "high" or "higher"; it is much more complicated; see #1, above.

Friday, September 02, 2011

Frederic Bastiat famously noted that "If goods do not cross borders, armies will." Make that supposedly, because there is an interesting controversy surrounding the provenance.

The story of borders involves the powers of any state vs the power of markets. The U.S. southern border is famously porous and we know that labor will always seek to cross borders (and distances) in pursuit of greater rewards.

Huge movements of mobile capital illustrate a more recent phenomenon. Some Americans fret that the U.S. is now a "debtor" nation while others celebrate the continued international popularity of U.S. assets, including U.S. Treasury debt. The near panic over the purchase of iconic assets by Japanese interests in the 1980s has been succeeded by a similar panic over acquisition of favorites by Chinese interests. Today's LA Times includes this op-ed: "Dodger Red: A Chinese government bid for the home team? Say it ain't so." The piece includes a red-background mock-up of the odious Mao-Tse Tung wearing a L.A. Dodgers cap.

Emotional attachments to sports teams are complex. When the current owner (Frank McCourt) bought the Dodgers some years ago, there were complaints that he was not a local native and, therefore, not qualified. But as unpopular (and unsuccessful) as the McCourts are/were (Frank and Jamie McCourt are battling over team ownership in divorce court), "the Chinese" would be the last straw.

Market forces eventually prevail over politics and they will also conquer emotional sports team allegiances. We are just seeing another minor skirmish on the path of globalization/cosmopolitanization. How do I know? If the new owners (from China or anywhere) field a winning team, they will be forgiven and (more importantly) one more prejudice will be revealed for what it is.